Latest news with #INEGI
Yahoo
22-05-2025
- Business
- Yahoo
Weak Mexican growth, rising May inflation sound alarms for economy
By Brendan O'Boyle and Ricardo Figueroa MEXICO CITY (Reuters) -Analysts sounded alarms over Mexico's economy on Thursday after new data showed feeble growth in the first quarter while inflation spiked outside the central bank's target range for the first time this year. Gross domestic product (GDP) in Latin America's second-largest economy grew 0.2% in the first quarter from the previous three-month period, statistics agency INEGI said, in line with market forecasts in a Reuters poll and a preliminary estimate released last month. While agricultural growth offset declines in manufacturing and services, allowing Mexico to avert the technical recession some had feared, the overall economy still indicated weakness. "Underlying momentum remains fragile and forward-looking indicators suggest a deteriorating outlook," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics. In annual terms, Mexico's GDP grew 0.8% in the first quarter. "The data show that during the period, industrial production continued to decline and services weakened," Mexican bank Banamex said. Economists warn the Mexican economy, strongly intertwined with the United States, remains at risk of contracting in coming quarters due to the uncertainty unleashed by U.S. President Donald Trump's trade policies and tariffs. "The outlook points to activity remaining weak in the coming quarters," Banamex added. Separate data showed that Mexico's headline inflation unexpectedly sped up to 4.22% in early May, above the 4.01% forecast of analysts polled by Reuters and outside the central bank's target range of 2-4%. Consumer prices rose 0.09% in the first 15 days of the month from the previous 15 days, driven in part by a surprise bump in chicken prices, while the less volatile core price index climbed 0.16% in early May, coming it at 3.97% on an annual basis. The Bank of Mexico cited weak economic activity in its decision last week to cut Mexico's benchmark interest rate by 50 basis points, its third straight cut of that magnitude, bringing it to 8.5%, the lowest since August 2022. Despite the jump in inflation, analysts at Actinver, Pantheon and Capital Economics all see Mexico's central bank cutting its rate again at its June monetary policy meeting. "The central bank once again sounded very dovish at its meeting last week and has made very clear that it's increasingly worried about the growth outlook," Capital Economics' Kimberley Sperrfechter said. Although growth is not part of the central bank's mandate, a weaker outlook is seen adding pressure on the governing board to continue reducing borrowing costs. Speaking alongside President Claudia Sheinbaum on Thursday, Finance Minister Edgar Amador said the GDP figures showed "solid performance and a continued expansion of the economy." Amador's ministry has a more upbeat forecast for Mexico's economy than private sector analysts. A draft budget from the finance ministry last month forecast the economy growing between 1.5% and 2.3% this year. A central bank survey of private sector economists published on May 2 had a median growth forecast of just 0.2% this year. "The Mexican economy is going well," Sheinbaum said on Thursday. "It is not necessary to change the model." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
France 24
30-04-2025
- Business
- France 24
Mexico avoids recession despite tariff uncertainty
Gross domestic product (GDP) grew 0.2 percent from the fourth quarter of 2024, when Latin America's second-largest economy had contracted for the first time in three years, national statistics agency INEGI reported. Year-on-year, GDP rose 0.6 percent in the first quarter, it said in a preliminary estimate. The positive growth means Mexico outpaced the US economy, which data released on Wednesday showed contracted in the first three months of the year. The resilient performance, at least for now, eased fears of a recession, generally defined as two consecutive quarters of economic contraction. "The economy dodged a technical recession last quarter. But growth was driven by a rebound in agriculture and the rest of the economy -- and the manufacturing sector in particular -- continued to struggle," Kimberley Sperrfechter, an economist at the Capital Economics consultancy firm, wrote in a note to clients. "The weakness in industry suggests that US tariffs on Mexico (threatened in February and in force in March) took a toll on the economy last quarter," she added. Trump has announced various tariffs targeting Mexico, as well as several policy U-turns, as part of his global trade war. While he left Mexico off the list of nations facing his steep "reciprocal tariffs," its carmakers as well as steel and aluminum exporters still face duties. Given the uncertain outlook, Mexico's central bank was likely to announce another half-percentage-point cut to its benchmark interest rate in May, Sperrfechter predicted. The International Monetary Fund has predicted that Mexico's economy will shrink by 0.3 percent this year. President Claudia Sheinbaum has said her outlook is more optimistic, because of her efforts to boost the economy and attract foreign investment. Her government has touted a series of major investments pledged by international companies in recent weeks, including e-commerce behemoth Amazon, its regional rival Mercado Libre, streaming giant Netflix and Spain's biggest bank Santander. In theory, Mexico should be protected against US tariffs by a North American free trade agreement that was renegotiated during Trump's first term in office. The United States-Mexico-Canada Agreement (USMCA), which replaced the previous NAFTA accord on July 1, 2020, is due to be reviewed by July next year. Mexico replaced China in 2023 as the largest trading partner with the United States, which buys more than 80 percent of its exports.
Reuters
30-04-2025
- Business
- Reuters
Mexico avoids technical recession but economists see tough path ahead
April 30 (Reuters) - Mexico's economy performed better than expected in the first quarter of the year, preliminary data released by national statistics agency INEGI showed on Wednesday, although analysts continue to warn of a difficult path ahead. Latin America's second-largest economy grew 0.2% in the first quarter from the final three months of 2024, INEGI said. here. That outpaced market expectations in a Reuters poll for zero growth and also marked a rebound from a 0.6% fourth-quarter contraction, but economists continued to sound a cautious note in light of the trade shock generated by U.S. President Donald Trump's tariff threats. "The quarter-to-quarter gain helped the Mexican economy avoid a technical recession, but it does little to alter the weak trajectory," Pantheon Macroeconomics chief Latin America economist Andres Abadia said in a note to clients. He mentioned heightened domestic uncertainty, tight financial conditions and ongoing risks from the U.S. trade war, noting that leading indicators already point to a challenging outlook. Quarterly growth was driven mainly by an 8.1% expansion in the primary sector, which includes farming, fishing and mining. Secondary or manufacturing activities contracted 0.3% while services were unchanged. Compared with the same quarter a year earlier, the Mexican economy expanded 0.8% in the January-March period, the statistics agency said, also boosted by primary activities. Economists expected 0.6% year-on-year growth. Capital Economics emerging markets economist Kimberley Sperrfechter said the data, which suggests that Mexico headed into the second quarter with weak momentum, should reinforce the central bank's concerns about the health of the economy. "This should pave the way for another 50 basis point rate cut at Banxico's meeting next month," she said, which would represent the third such consecutive reduction, even as annual inflation ticked up in early April.
Reuters
21-02-2025
- Business
- Reuters
Mexico economy contracts 0.6% in the fourth quarter as trade tensions loom
Feb 21 (Reuters) - Mexico's economy shrank in the fourth quarter for the first time in more three years, official data showed on Friday, as the central bank expects at best lackluster growth next year and economists see stiff risks ahead including trade tensions. Statistics agency INEGI estimated that gross domestic product (GDP) contracted 0.6% in the October-to-December period when compared to the previous quarter, matching market expectations in a Reuters poll. The data, marking the first drop on a sequential basis since the third quarter of 2021, confirmed preliminary data from INEGI last month that underscored ongoing challenges faced by Latin America's second-largest economy. Fourth-quarter GDP was dragged down by an 8.5% quarter-on-quarter decline in the economy's primary sector, which includes farming, fishing and mining. Secondary or manufacturing activities were down 1.5%, though services grew 0.2%. "These figures confirm that growth slowed in Q4 due to several headwinds, including tight financial conditions, heightened external risks, domestic uncertainty and bad weather," said Andres Abadia of Pantheon Macroeconomics. Slowing economic activity, coupled with cooling inflation, is seen helping drive borrowing costs lower in Mexico, where the benchmark interest rate stands at 9.50%. On Thursday, the central bank signaled it might continue cutting the rate at future meetings and could "consider adjusting it in similar magnitudes" to its most recent 50-basis- point reduction. "Lower interest rates, falling inflation and still-healthy real wages will prevent a prolonged contraction in the short term," noted Abadia. "The key threat remains the risk of a tariff war," he added, referring to threats from U.S. President Donald Trump to slap across-the-board duties on Mexican goods. The United States is by far Mexico's top trade partner. In annual terms, Mexico's economy expanded 0.5% in the fourth quarter compared to a year earlier. Growth in the full year reached 1.2%. The Bank of Mexico expects growth this year to slow to 0.6%. It halved its forecast this week and even sees a possibility it could slide into recession, contracting by as much as 0.2%.
Reuters
07-02-2025
- Business
- Reuters
Mexico inflation slows in January as central bank steps up rate cuts
Feb 7 (Reuters) - Mexico's annual inflation rate slowed slightly more than expected in January, official data showed on Friday, after the central bank accelerated the pace of its interest rate cuts and signaled more monetary easing ahead. In Latin America's largest economy, the headline annual inflation rate hit 3.59% in January, statistics agency INEGI said, down from 4.21% the previous month and just below the 3.61% expected by economists polled by Reuters. The improving inflation environment, with consumer price rises now within the Bank of Mexico's 2% to 4% target range, and an economic contraction reported late last year have allowed policymakers to reduce borrowing costs in the country. The central bank announced on Thursday a 50 basis-point cut to its benchmark interest rate to 9.5%, doubling the pace of its easing cycle and saying it could cut by a similar magnitude in future as inflation cools. "This is a good inflation report, supporting Banxico's dovish tilt yesterday," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said. "Inflation in Mexico hit cyclical lows recently, thanks in large part to subdued core pressures, giving Banxico some space to start normalizing monetary policy. But the Mexican peso sell-off in Q4 remains a near-term risk to price stability." In January alone, according to INEGI, consumer prices were up 0.29%, slowing from the 0.38% rise seen in December. Economists in the Reuters poll expected a 0.31% increase. The core index, which strips out some volatile food and energy prices, rose 0.41% during the month and 3.66% on an annual basis. Market forecasts were at 0.45% and 3.70%, respectively.
